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BBC News business reporter Dearbail Jordan has reported that Associated British Foods has issued a warning that one of the UK’s two bioethanol plants could potentially face closure if it does not receive state support following a tariff agreement with the US government. The company has stated that despite “formal negotiations” being committed by the government, it will commence consultations with 150 employees at its Vivergo bioethanol business in Hull as a preparatory measure for a possible shutdown.
The UK’s largest bioethanol plant, Vivergo, could be at risk of closure, as the government’s deal to eliminate a 19% tariff on US ethanol imports, replacing it with a tax-free quota of up to 1.4 billion litres, has raised concerns. Another bioethanol site in the UK, Ensus on Teesside, owned by Germany’s Sudzucker Group, also faces a similar threat of closure due to the impact of the UK-US trade agreement compromising its business position.
AB Foods has been actively advocating for government assistance regarding the bioethanol industry, with initial concerns raised about the influx of cheaper US shipments. The US’s provision of subsidies and tax credits for ethanol production, coupled with the elimination of import duties on American ethanol through the trade agreement, has further exacerbated the situation for UK bioethanol producers. Despite efforts to negotiate financial support with the government, AB Foods set a deadline for an agreement, which was later considered to have lapsed.
Labour MP Karl Turner emphasized the detrimental impact that losing the bioethanol market would have on the UK’s progress towards reaching net zero emissions and the potential devastation to communities like Hull. The Department of Business is currently seeking external consultants to evaluate a plan for Vivergo, with a focus on safeguarding supply chains, jobs, and livelihoods. The looming closure of bioethanol plants in Hull and Teesside could significantly impact the UK’s bioethanol industry, potentially leaving it reliant on overseas suppliers and affecting thousands of jobs in the sector
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